Days before their condo building burned, residents of Park South Six gathered to hear their association president say their building couldn't afford flood insurance.
Some homeowners paid overdue assessments, and the president said flood
insurance would be purchased.
"I was rest assured," said board member Jennie Valdes.
No one thought to ask about the building's master property insurance
On May 7, owners of the 30 units in the unadorned white, three-story
building learned they didn't have that either.
"I paid my maintenance fees every month," owner Jassodra
Kirsch told police as she tried to file a report with them last week.
"What happened to the money?"
Now owners are scrambling to figure out what to do. Some have talked
with lawyers about suing the association board. Some have asked police
to investigate the president and what happened to the monthly
assessments they paid — $149 for one-bedroom units and more than
$200 for the others. City and state officials say there's little they
can do to help the condo owners now.
The situation illustrates the dire straights of some condo and
homeowners associations in this tough economy. South Florida lawyers
and insurance agents say they're sure Park South Six isn't the only
building around that's going without coverage, even though it's
required by law.
Donna Berger is a condo attorney with Katzman Garfinkel & Berger
in Fort Lauderdale
. She said several of her clients considered going without
hurricane insurance, typically the most expensive coverage. She told
them not to do it, even if all unit owners approved.
"Going without coverage is not an option. Cutting out every other
service if need be, passing a special assessment and/or terminating
the condominium entirely would be better," Berger wrote on her
"This condominium is a cautionary tale for any other boards or
directors out there that think cost savings should start by cutting
out your safety net."
When a board cancels its master insurance policy, the insurer is
required to inform mortgage lenders for individual condo units. The
lender can force the unit owner to pay for part of the master policy,
said Howard Nelson, president of the Mortgage Bankers Association of
Florida and a vice president and area manager of BB&T.
But that doesn't always happen. Banks are overwhelmed these days with
forclosures and other loan problems so some insurance lapses can
"slip though the cracks," said said Todd Campbell, who owns
Federated Mortgage Services in Fort Lauderdale.
The state has no way to know how many condo associations don't have
coverage. Associations don't report their insurance status, and the
Division of Condominiums, Timeshares and Mobile Homes investigates
only when there's a complaint. In the past 12 months, it has received
only 23 complaints about insurance lapses among about 21,000
associations, according to Michael Cochran, agency director. More than
half of those were unfounded.
There's little the agency can do if the complaint comes after a
disaster. "What happened here is simple negligence, a complete
failure to do what they should have done – get insurance,"
Lauderhill City Manager Chuck Faranda said the city's primary concern
now is to ensure the building doesn't endanger the neighborhood,
especially now in hurricane season.
"We don't have jurisdiction over the condo board," he said.
" What they need to do is get an attorney … to intepret the
documents and find out where their money is and who didn't pay."
Park South Six unit owners said they're frustrated they can't find
anyone to look into what happened to the condo association's money.
"No one is investigating. It has been a month now," Kirsch
"Nobody wants to do nothing," added Yves Marie Joas, who
rented the Park South Six unit owned by Kirsch. Condo owners met with
Legal Aid but only got advice about short-term aid, such as food
stamps. There was no discussion about how unit owners could try to
recover their investments.
When several unit owners tried to file a complaint with police
recently, an officer said they would need documents that show the
insurance policy lapsed and that their monthly maintenance fees were
to cover the insurance premiums.
"But we don't have that," Kirsch explained. Several owners
said they had asked Board President Consywelia Howard for annual
financial statements before the fire, but never received them.
Paul Munoz, whose father owns a unit in the building and is still
making mortgage payments, said he had asked specifically for
information about the master policy a month before the fire.
Howard could not be reached for comment despite numerous phone calls.
Without insurance, the owners have few resources. An insurer would
have investigated if the fire was caused by faulty equipment,
construction or repairs so it could hold the manufacturers or
contractors responsible, said Robert Friedman, a condo insurance
attorney at Gunster in West Palm Beach. Those duties now fall to the
condo association's six officers and directors, who have not met since
The Lauderhill Fire Department determined the fire started in unit
304, but it's unclear if the owner had insurance on the unit. If he
had coverage, his insurer would have to pay for repairs up to the
limits of the policy, Friedman said.
The best option owners may have is to dissolve the association, sell
the land and divvy up the proceeds, said Cochran. If there are any.
The city is talking about demolishing parts of the building and
placing a lien to recoup the cost, roughly $25,000.
Even without that expense, Park South Six owners would not recover
much, at most the value of the land. For Luis and Mirtha Quiroga that
could amount to just a few thousand dollars. They paid $58,000 for
their one-bedroom unit in 2006; in 2009 the Broward County Property
Appraiser valued it at $28,690, including $3,190 for the land.
"We don't have anything" except a car, said Luis Quiroga,
73. He and his wife are staying with relatives in a one-bedroom
When asked what's next, Quiroga pointed to the sky: "Maybe."